Saudi Arabia may raise official crude prices for Asia in November
Top oil exporter Saudi Arabia may raise prices for most crude grades it sells to Asia in November on expectations for demand recovery and Chinese refineries to increase output following the issuance of new product export quotas.
The November official selling prices (OSP) for flagship Arab Light crude may rise by 25 cents a barrel, according to the median of the responses of five refining sources surveyed by Reuters on Sept. 29-30.
The backwardation in the Dubai market structure widened during trading last month, implying that demand for crude in the near term is rising. The premium for front-month Dubai over the price for the third month averaged $5.36 a barrel in September, up from $5.07 in August.
The market also expects China, the world’s biggest crude importer, to increase purchases as Beijing has issued a fresh round of refined product export quotas, totalling 15 million tonnes. That could encourage Chinese refineries to lift their crude buying to ramp up fuel output
Refining margins for gasoline and diesel plunged on China’s new export quotas as a flood of refined products would knock down the prices of the products.
The respondents polled by Reuters assess the price increase for Arab Medium and Arab Heavy to be larger than Arab Light, as the refining margins, also known as cracks, for fuel oil are performing better than the light- and middle-distillate products.
China issued 1.75 million tonnes of export quotas for low-sulphur fuel oil, compared to 13.25 million tonnes for other products in the recent round.
OPEC+ will consider an oil output cut of more than a million barrels per day (bpd) during their monthly meeting this week, in what would be the biggest move yet since the COVID-19 pandemic to address oil market weakness.
Benchmark oil prices have fallen by more than 30% since March.
